Nevi Event 10 Oktober -Een kijkje in de DSM inkoopkeuken- Ron van den Akker Vice President Purchasing Indirect

Transcription

1 Nevi Event 10 Oktober -Een kijkje in de DSM inkoopkeuken- Ron van den Akker Vice President Purchasing Indirect oktober, 2016

2 CONFIDENTIAL Content DSM & Purchasing introduction DSM De-Complexing journey 3. Program 2014 and Appendices per BG 1

3 Mission Our purpose is to create brighter lives for people today and generations to come We connect our unique competences in Life Sciences and Materials Sciences to create solutions that nourish, protect and improve performance 2

4 Building on an impressive history Hoffman La Roche s Vitamins (1930s) Gist-Brocades (1869) DSM (1902) Chemical synthesis & biotechnology Life Sciences Biotechnology Materials Sciences Energy, chemistry & polymer technology Vitamins Omega s Carotenoids Premixes for food & feed Enzymes Minerals Cultures & Yeasts Nutraceuticals Pharmaceuticals Cellulosic bioethanol Biomedical materials Bio-plastics High Performance Plastics Coating Resins Functional Materials Solar advanced surfaces 3

5 DSM at a glance (2015) Sales* Global* presence Listed at Euronext NYSE Sustainability leader > 10 billion ~25,000 employees worldwide Share price ~ quintupled in 25 years Top ranking Dow Jones Sustainability Index DSM is a global Life Sciences and Materials Sciences company active in health, nutrition and materials DSM delivers innovative solutions that nourish, protect and improve performance in global markets such as food and dietary supplements, personal care, feed, medical devices, automotive, paints, electrical & electronics, life protection, alternative energy and bio-based materials DSM and its associated companies deliver annual net sales of about 10 billion with approximately 25,000 employees * Including 2015 pro-forma and pro-rata (annualized) sales & number of employees (ultimo 2015) of non-consolidated Associates & Joint Ventures (for sales this is mainly Patheon, DSM Sinochem Pharmaceuticals and ChemicaInvest) 4

6 Leader in Health, Nutrition and Materials Health Nutrition Materials Leading supplier of nutritional ingredients (including vitamins, carotenoids, omega s, food/feed enzymes, cultures, yeasts, nutraceuticals) for the feed, food and personal care industries Leading supplier of sustainable high performance materials for the automotive, electrical & electronics and building & construction industries Recognized as top innovator active in biomedical materials, advanced biofuels, bio-based chemicals and advanced surfaces for solar systems 5

7 Key markets Dairy RTE meals Soups / Sauces / Spreads Wine-Beer-Fruit drinks Materials sciences Building & Construction Automotive Other Electrical & Electronics 5% 8% 5% (Food) Packaging 9% 7% 32% Animal Feed Food & Beverages 17% 5% 10% 2% Infant nutrition Dietary Supplements Personal Care Life sciences DSM offers products & solutions to a wide range of markets 6

8 CONFIDENTIAL Global presence Continuing Operations as reported ultimo March 2016 Sales by destination 2015 North America 23% 43% High Growth Economies North America: 3,151 employees Europe: 9,298 employees Western Europe Asia: 6,028 employees 28% 6% Rest of World Latin America: 2,021 employees Africa: 73 employees Africa & Oceania: 252 employees * Excluding our non-consolidated Associates & Joint Ventures 7

9 CONFIDENTIAL DSM Strategy 2018: Driving profitable growth through science-based, sustainable solutions Health & Wellness Global shifts & Digitization Climate & Energy IMPROVING FINANCIAL RESULTS Growth 2018 TARGETS annual EBITDA growth: high single-digit Cost & Productivity HEALTH. NUTRITION. MATERIALS Capital Efficiency annual ROCE growth: high double-digit bps Result-driven organization & culture 8

10 CONFIDENTIAL Phase 1-Purchasing Strategy 9

11 Purchasing strategy

12 FOR INTERNAL USE ONLY Purchasing Mission Our purpose is to connect customer needs with supplier solutions. What: Contribute to innovation, sustainability and asset light strategy on a global scale Ensure best value balance quality, price and risk of supply How: In-depth knowledge of supply markets Close collaboration with suppliers Bring supplier capabilities to DSM in an efficient and transparent way 11

13 The Value Proposition 12

14 CONFIDENTIAL Phase 2 Indirect Roadmap 13

15 Indirect Snapshot 2.0 billion spend 90+% spend transparency 90+% PO compliance 7+% average annual savings SRM single largest DSM IT-platform Active support to 60+ sites Contract compliance from 18% to 65% suppliers in systems active suppliers last year 4 Cluster strategies approved by PLT (and implement in 2012) P2P transactions Perf Mngt Syst implemented 3.8 on scale of 5.0 customer survey 20 suppliers in Key Supplier Development 14

16 PE Maturity Indirect: Global Overview 2013/16 Typical to Value Adding Indirect has delivered Leading Edge Value Adding Actual Viewpoint > Ambition Target Typical Actual Viewpoint Continuous improvement via Purchasing & Functional Excellence Awareness Innocence Functional Focus Indirect Roadmap X-Functional Focus: Internal & External

17 DSM Purchasing (Indirect) journey Setting Purchasing basis Invoice based Business Warehouse (spend data) E-Classification Standard Purchasing roles (incl. CPO) Strategic Sourcing Methodology Corporate sourcing & P2P requirements Value conventions Close the Loop program One global Indirect, centrally led, organization Strengthening of regions; category management Integration of SAP via SRM Standardize way of working Sourcing (Ariba) Split transactional (P2P) and Sourcing organization (buying/category management) Beyond savings; decomplexing and game changing Business changing initiatives based on supplier solutions Spend towards Regional Preferred supply base De-complex organization and supply base Transactional organization to integrated shared services

18 2017: the next evolution in value creation Ariba as a virtual procurement platform 50% decrease supply base Purchasing performance/ cost (in mln) = ratio Internal account mngt Demand mngt transparency demand influencing Procurement technology Key supplier mngt decomplexing Incorporate acquisitions % automated ebusiness connections Value adding purchasing skills Anchored sustainability/innov Full ownership contracting BI driven value chain solutions

19 FOR INTERNAL USE ONLY Sustainability From responsibility to differentiation Compliance Supplier Code of Conduct Self-assessment questionnaires Supplier audits Supplier rating Joint improvement plans Sustainability: our core value People Planet Profit Supplier Solutions Eco+ Low or neutral carbon footprint of materials Elimination of hazardous substances Minimize use of packaging Improve footprint of logistic operations Reduce water footprint Focus on bio-diversity People+ SHE/ Life Saving Rules Better working conditions Local community development Local job creation Education 19

20 The organization close to the business 20

21 Organization Chart MB Dimitri de Vreeze CPO Koen Devits Ron van den Akker 21

22 Standardized Procurement Technology & Processes Connecting (virtual) organizations for improved transparency, cooperation & multiplying capabilities e-sourcing: SSM & Events global transparency for all Sourcing activities Supplier Life Cycle management manage suppliers across all sites including supplier risk management Contract Life Cycle management full accessibility to all contracts 22

23 Digitization journey q-mdm SRM BW 23

24 Purchasing Indirect Roadmap 24

25 De-complexing Indirect Sourcing Deliver more with less Lex Sips Directeur Purchasing Indirect

26 The reality in 2013 Setting the scene Annual spend 1.8 B s Approximately 41,000 active suppliers. 65 large & medium site support by Global Indirect organization. 150 franchise sites More than 5000 contracts managed centrally. On average 100 new suppliers created every week. Multiple ERP systems. Migration to SRM ongoing. Multiple ordering channels (R3 PtP, OTC, SRM, other) Contract compliance at 45%. Contract and supplier base relatively invisible for on-site stakeholders. Many small sites with small, highly fragmented Indirect spend. DS sourcing indirect serves all indirect categories On site (Sourcing) processes vary significantly. Conclusion: The overall complexity is high. Consequences Leverage is not optimal and limited in some cases. Labor intensive sourcing processes due to large number of suppliers and contracts. Relatively high emphasis on tactical purchasing. Transactional processes labor intensive due to re-work in process. Focus on strategic sourcing can be further improved. Organizational costs are relatively high. In a setting where we are expected to deliver more with fewer people, complexity becomes a key inhibitor. 26

27 De-complexing as part of the Indirect Purchasing roadmap Professionalization Scaling spend due to acquisitions Securing high performance through new value drivers Business Intelligence Game Changing initiatives De-complexing Ambition 2016 Status 2013 Professionalization 27

28 Sourcing complexity: dimensions Large number of suppliers Large number of contracts Large number of stakeholders & sites Large number of categories Complexity Varying sourcing processes per site Different ERP systems Varying customer requirements versus DS scope/role 28 Scope

29 Root cause analysis 29

30 Sourcing Impact analysis of solutions Based on EU1 work load analysis PSSC Supplier reduction SQA: 10% Eliminate unused vendors Tail end consolidation: 20% Increase % First time right of shopping carts Process Optimalization Electronic signature Clause library CLM (new contr. Str) SLM (SDP, SPM) Effect CAM Buyer PSSC Value Supplier Reduction Process optmalization 4% 6% tbd Increased leverage 9% 13% tbd Improve channel mix wrt to hands free PO s Portal Transparency Category cards Deployed SLA s Transparency tbd Increased leverage Organization Improve PO process Clear COM roles Interface DS/PSSC Training BG s Middle office for buying Organization 30 Note: Impact analysis excluding LCP buyer resources Increase Improve % NCI First time percentage right of shopping carts

31 Ease of implementation Prioritization key solutions Priority Higher Clause library Impact PSSC Training BG s COM roles Deploy improved SLA s SQA Eliminate Unused Suppliers Clause library Electr. signature Impact PSSC SLM CLM Tail end cons Electr. signature Category Cards Portal Lower Interface DS/PSSC Impact PSSC Interface DS/PSSC Low Impact High 31

32 De-Complexing aimed at: Reducing and consolidating the supply base. Focus on preferred suppliers Implement integrators for tail end spend Utilizing other purchasing channels such as P- Card. Standardizing and simplifying processes. One platform for Sourcing processes: Ariba Implement operational buying for smaller spend Simplifying contract structure by replacing smaller contracts. 32

33 Process standardization and simplification 33

34 Standard Sourcing Processes on one Global platform Connecting (virtual) organizations for improved transparency, cooperation & multiplying capabilities e-sourcing: SSM & Events global transparency for all sourcing activities Supplier Life Cycle management manage suppliers across all sites including supplier risk management Contract Life Cycle management full accessibility to all contract 34

35 Benefits One way of working, high professional level. No unique site specific processes. Solid complaint and claim process (cost recovery) Transparency of sourcing projects, supplier performance etc. Collaboration tool leading to faster and better stakeholder involvement. 35

36 Next steps Automate interfaces between Ariba and other systems such as SRM. Re-consider work flows and take out redundant steps. Benefits: Possible work load reduction. Reduction in data pollution and inconsistency between systems. 36

37 Contract reduction and consolidation 37

38 Indirect Sourcing contracts Sourcing manages in excess of 5700 contracts, many of them very small. Contract complexity has resulted in: Limited leverage. Too many small approved suppliers. Many contracts are extended many times without renegotiation. Relatively high level of expired contracts. Consolidating these contracts under (preferred) contracts will yield savings and significant work load reduction. Further standardization of contract templates is needed. 38

39 De-complexing the supply base 39

40 Supplier classification Supplier segmentation Supplier Segmentation & Classification Overview Strategic Suppliers DSM Ariba Preferred Suppliers Tactical Suppliers Contracted Suppliers Approved Suppliers Operational Suppliers Temporary suppliers will be automatically blocked for Purchasing after 15 months 40 Temporary Suppliers SQA Potential Suppliers

41 Defining suppliers in scope for de-complexing Approved suppliers without spend Total supplier base ( suppliers) Approved suppliers with spend Temp suppliers with spend in last 12 months Temp suppliers with 0 spend in last 12 months In Scope ( suppliers) Automatic off boarding Suppliers to JV s and franchise sites Out of scope Suppliers of non-controllable spend Out of scope 41

42 Reduction of temporary suppliers OIPQC program 1. Off Board suppliers after consolidating the spend to preferred suppliers. 2. Consolidate tail end spend with Integrators. 3. Implement P Card for smaller non contracted spend 4. Qualify critical suppliers. 5. Contract qualified and critical suppliers. OIPQC plan jointly owned between Sourcing and Sites. Implementation 2016 and

43 Integrator projects some examples MRO: Consolidating all spare part supplies and supply chain activities to a limited number of integrators. Lab Chemicals and consumables: Consolidating a large part of supplies and supply chain activities to one Global integrator. Maintenance integrator: Consolidating the maintenance services for plants, lab equipment and buildings to a limited number of contractors. Outsourcing facility management to one integrated service provider. HR services: outsource and transfer HR services to a limited number of external service providers. Benefits: Safety performance on site. Price reduction (consolidation) Outsourcing the Sourcing activities. Work load reduction on site 43

44 Making supplier reduction sustainable Steer demand towards preferred suppliers via the supplier guide. Limit the addition of new suppliers. No late PO s Purchase requisition approval by Buyers. Mandatory use of supplier guide and guided shopping portal. Non Sourcing contracts cannot be used. SQA and temporary supplier approvals. Change in mind set and behavior of stakeholders on site. 44

45 Movie Decomplexing To be added 45

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47 Back up 47